Opta Minerals Inc
Opta Minerals Inc. Reports First Quarter Results for Fiscal 2015
WATERDOWN, ONTARIO - (Marketwire - May 13th, 2015) - Opta Minerals Inc. (TSX:OPM), today announced results for the three months ended March 31, 2015. All figures are reported in U.S. dollars and are in accordance with International Financial Reporting Standards (IFRS), except where otherwise noted.
Expressed in Thousands of US Dollars
|
3 months
|
3 months
|
|
ended
|
ended
|
|
March 31,
|
March 31,
|
I ncrease
|
|
2015
|
2014
|
(Decrease)
|
%
|
|
Revenue
|
$ 29,457
|
$ 34,489
|
$ (5,032)
|
-14.6%
|
|
Gross Profit
|
3,743
|
4,897
|
(1,154)
|
-23.6%
|
|
12.7%
|
14.2%
|
-1.5%
|
|
EBITDA1
|
953
|
2,270
|
(1,317)
|
-58.0%
|
|
EBIT2
|
(323)
|
779
|
(1,102)
|
-141.5%
|
|
Income (Loss)
|
(757)
|
(254)
|
(503)
|
198.0%
|
EPS
$ (0.04) $
(0.01) $
(0.03)
1 EBITDA is a non-IFRS measure: refer to Footnotes
2 EBIT is a non-IFRS measure; refer to Footnotes
Operational and Financial Highlights:
First quarter revenue in the Steel and Magnesium segment decreased 7.0% from 2014. The Steel and Magnesium segment has primarily been impacted by a slow down in the steel industry in the U.S. and strengthening US exchange rates against the EUR and CAD, affecting non-U.S. based business results converted to U.S. dollars. The Industrial Minerals segment decreased 24.3% over 2014. The decrease in the quarter was primarily due to harsh weather throughout North America, competitive pressure, and exchange and industry conditions similar to the Steel segment. The Company is focused on cost reduction to realign to a lower revenue base.
Gross profit decreased quarter over quarter due to lower volumes and reduced gross profit margins of 12.7% compared to
14.2% in 2014. Gross profit margins have declined primarily from reduced facility utilization.
Selling, general and administrative expenses (SGA) were $3,286 or 11.2% as a percent of revenues, compared to $4,357 or
12.6% of revenues in the prior year quarter. Reduced SG&A is a function of cost reductions including headcount reductions already completed in Q4 2014 and the early part of 2015, as well as the strengthening US dollar and its impact on corporate
costs which are primarily in Canadian dollars. The Company is targeting 10% SGA as a percent of revenues.
Results include non-cash foreign exchange losses of $782 in the current quarter compared to foreign exchange gains of
$251 in the prior year comparative quarter. This was driven by the strength of the US dollar against both the Canadian dollar
and Euro.
Working capital at March 31, 2015 amounted to $20.3 million and total assets were $110.4 million, as compared to $21.8 million and $117.7 million, respectively, at December 31, 2014. While overall working capital is approximately the same as
at December 31, 2014, the current quarter ended March 31, 2015 reflects lower accounts receivable as a result of lower revenues.
The debt to equity ratio at March 31, 2015 was 0.99 to 1.00, and at December 31, 2014 was 1.00 to 1.00.
David Kruse, President and CEO of Opta Minerals, noted "Since the fall of 2014 we have been engaged in cost reductions including headcount in order to streamline the business and improve results. Unfortunately, the steel industry after a good fourth quarter in
2014 has softened considerably due to the cascading effect of lower oil prices. We have felt this impact, combined with exchange rate
movements when we consolidate our results and the very cold winter and its impact on our Infrastructure business. We believe the steel industry will improve in the back half of 2015 and we have not lost any significant customers through this downturn. Our priorities are to continue to reduce costs, simplify the business and improve cash flow through working capital management. We are also working on a number of revenue growth opportunities in the steel segment of our business."
Opta Minerals is a vertically integrated provider of custom process solutions and industrial mineral products used primarily in the steel, foundry, loose abrasive cleaning, water-jet cutting and municipal water filtration industries. The Company has production and distribution facilities in Ontario, Quebec, Saskatchewan, Louisiana, South Carolina, Virginia, Maryland, Indiana, Michigan, New York, Texas, Florida, Ohio, Idaho, France, Slovakia and Germany. Opta has one of the broadest product lines in the industry.
For further information, please contact:
Opta Minerals Inc.
David Kruse, President and Chief Executive Officer Peter Fryters, Chief Financial Officer and Treasurer Tel: 905-689-7361, ext 405
H[email protected]
Website: www.optaminerals.com
2
FOOTNOTES:
---------
Earnings before income taxes and interest ("EBIT"); and earnings before interest, income taxes, depreciation and amortization ("EBITDA") as defined below, are both non-IFRS earnings measures that do not have standardized measures prescribed by IFRS, and therefore may not be comparable to similar measures presented by other publicly traded companies.
For the three
Months Ended
March 31
|
2015
$
|
2014
$
|
|
Loss for the Period
|
(757)
|
(254)
|
|
Finance Ex pense
|
863
|
901
|
|
Income Tax (Recov ery ) Ex pense
|
(429)
|
132
|
|
Depreciation and Amortization
|
1,278
|
1,479
|
|
Fair Value Adjustments to Contingent Consideration
|
(2)
|
12
|
|
EBI TDA1
Subtract:
Depreciation and Amortization
|
953
1,278
|
2,270
1,479
|
|
Fair Value Adjustments to Contingent Consideration
|
(2)
|
12
|
|
EBI T2
|
(323)
|
779
|
|
Notes
|
1) The term "EBITDA" refers to earnings before deducting finance expense, income taxes, depreciation and amortization. The Company believes that EBITDA is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration non-cash asset depreciation and amortization. EBITDA is not a recognized measure under International Finance Reporting Standards (IFRS), and accordingly, investors are cautioned that EBITDA should not be construed as an alternative to net earnings or loss determined in accordance with IFRS as an indicator of the financial performance of the Company or as a measure of the Company's liquidity and cash flows. The Company's method of calculating EBITDA may differ from other issuers and accordingly, EBITDA may not be comparable to similar measures presented by other issuers.
2) The term "EBIT" refers to earnings before income taxes and finance expense. The Company believes that EBIT is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed or taxed. EBIT is a non-IFRS earnings measure that does not have standardized measures prescribed by IFRS, and therefore may not be comparable to similar measures presented by other publicly traded companies.
FORWARD-LOOKING STATEMENTS:
Certain statements in this release constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements in this press release include, without limitation, statements relating to the Company's targets with respect to SGA as a percent of revenues, anticipated improvements in the steel industry in the second half of 2015, the Company's intention to focus on reducing costs, simplifying the business and improving cash flows and potential revenue growth opportunities, as well as other statements which reflect the current expectations of management of the Company regarding the Company's future growth, results of operations, performance, business prospects and opportunities. Wherever possible, words such as ''may'', 'would'', ''could'', ''should'', ''will'', ''anticipate'',
''believe'', ''plan'', ''expect'', ''intend'', ''estimate'', ''aim'', ''endeavour'', ''seek'', ''predict'', ''potential'' and similar expressions have been used to identify these forward- looking statements. These statements reflect management's current beliefs with respect to future events and are based on information currently available to management of the Company. Forward-looking statements involve significant risks, uncertainties and assumptions. Many factors could cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, without limitation: the impact of general economic conditions; the impact of specific industry conditions; the inability of the Company to successfully integrate recently acquired businesses or to achieve the anticipated benefits from such acquisitions; the risk of unexpected costs or liabilities relating to acquisitions; currency fluctuations and exchange rate risks; risks associated with foreign operations; governmental and environmental regulation; competition from other industry participants; cancellations of or the failure to renew purchase orders; production and delivery issues; quality, pricing and availability of raw materials; mining risks; and the other risks identified in the Company's Annual Information Form and other public filings (copies of which may be obtained at www.sedar.com). Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements may vary materially from those expressed or implied by this press release. These factors should be considered carefully
3
and reader should not place undue reliance on the forward-looking statements. Although any forward-looking statements contained in this press release are based upon what management currently believes to be reasonable assumptions, the Company cannot assure readers that actual results, performance or achievements will be consistent with these forward-looking statements, and management's assumptions may prove to be incorrect. These forward-looking statements are made as of the date of this press release and, other than as required by law, the Company does not intend, and does not assume any obligation, to update or revise these forward- looking statements, whether as a result of new information, future events or otherwise.
4
Opta Minerals Inc.
Interim Condensed Consolidated Balance Sheets As At March 31, 2015 and December 31, 2014 (Unaudited)
Expressed in Thousands of US Dollars (except per share amounts and number of shares)
March 31,
2015
December 31,
2014
Assets
Current
Cash and cash equivalents $ 2,083 $ 2,170
Trade receivables, other receivables and prepayments 17,644 20,236
Inventories 34,020 34,486
Income taxes receivable 960 996
54,707 57,888
Property, Plant and Equipment 20,321 21,926
Intangible Assets 24,822 26,827
Goodwill 8,919 9,447
Deferred Income Tax Assets 1,617 1,645
$ 110,386 $ 117,733
Liabilities
Current
Trade and other payables $ 14,702 $ 17,216
Borrowings 18,435 17,492
Provisions 698 772
Other liabilities 408 492
Income taxes payable 190 136
34,433 36,108
Borrowings 26,826 30,103
Derivative Financial Instruments 547 285
Provisions 482 447
Other Liabilities 153 242
Deferred Income Tax Liabilities 2,207 3,040
64,648 70,225
Equity Attributable to the Shareholders of the Company
Capital Stock
Authorized without limit as to number - Preference shares (without par value) Common shares
Issued -
18,129,566 common shares (December 31, 2014 - 18,125,164) 17,911 17,905
Contributed Surplus 4,745 4,696
Accumulated Other Comprehensive Loss (2,559) (1,491)
Retained Earnings 25,641 26,368
45,738 47,508
$ 110,386 $ 117,733
5
Opta Minerals Inc.
Interim Condensed Consolidated Statements of Loss For the Three Months Ended March 31, 2015 and 2014 (Unaudited)
Expressed in Thousands of US Dollars (except per share amounts)
March 31,
2015
March 31,
2014
Revenue $ 29,457 $ 34,489
Cost of Goods Sold 25,714 29,592
Gross Profit 3,743 4,897
Expenses
Selling, general and administrative 3,286 4,357
Fair value adjustments to contingent consideration (2) 12
Foreign exchange loss (gain) 782 (251)
4,066 4,118
Income (Loss) Before Finance Expense and Income Taxes (323) 779
Finance expense 863 901
Loss Before Income Taxes (1,186) (122)
Income tax (recovery) expense (429) 132
Loss for the Period Attributable to the Shareholders of the Company $ (757) $ (254)
Loss per share for the period - basic and diluted $ (0.04) $ (0.01)
6
Opta Minerals Inc.
Interim Condensed Consolidated Statements of Comprehensive Loss
For the Three Months Ended March 31, 2015 and 2014 (Unaudited)
Expressed in Thousands of US Dollars
March 31,
2015
March 31,
2014
Loss for the Period Attributable to the Shareholders of the Company $ (757) $ (254)
Other Comprehensive (Loss) Income, net of income taxes
Items that may be reclassified subsequently to profit or loss
Unrealized (loss) gain on translation of foreign operations (872) 94
Unrealized loss on derivative financial instruments designated as cash flow hedges (196) (58) Other comprehensive (loss) income, net of income taxes (1,068) 36
Comprehensive Loss Attributable to the Shareholders of the Company $ (1,825) $ (218)
7
Opta Minerals Inc.
Interim Condensed Consolidated Statements of Changes in Equity
For the Three Months Ended March 31, 2015 and 2014 (Unaudited)
Expressed in Thousands of US Dollars (except per share amounts and number of shares)
Number of Shares - Capital Stock
Capital
Stock
Contributed Surplus - Share-based Payments
AOCI* - Cash Flow Hedge
AOCI* - Foreign Currency Translation Reserve
Retained
Earnings
Total
Equity
At January 1, 2015 18,125,164 $ 17,905 $ 4,696 $ (210) $ (1,281) $ 26,398 $ 47,508
Comprehensive Loss
Loss for the period - - - - - (757) (757)
Unrealized loss on translation of
foreign operations - - - - (872) - (872)
Unrealized loss on derivative financial instruments designated as cash
flow hedges
Total Comprehensive Loss
Transactions with Shareholders
Employee share purchase plan 4,402 6 - - - - 6
Share-based payment expense - - 49 - - - 49
Total Transactions with Shareholders 4,402 6 49 - - - 55
At March 31, 2015 18,129,566 $ 17,911 $ 4,745 $ (406) $ (2,153) $ 25,641 $ 45,738
At January 1, 2014 18,111,247 $ 17,882 $ 4,358 $ (230) $ (632) $ 28,280 $ 49,658
Comprehensive Loss
Loss for the period - - - - - (254) (254) Unrealized gain on translation of
foreign operations - - - - 94 - 94
Unrealized loss on derivative financial instruments designated as cash
flow hedges
Total Comprehensive Loss
Transactions with Shareholders
Employee share purchase plan 3,801 6 - - - - 6
Share-based payment expense - - 109 - - - 109
Total Transactions with Shareholders 3,801 6 109 - - - 115
At March 31, 2014 18,115,048 $ 17,888 $ 4,467 $ (288) $ (538) $ 28,026 $ 49,555
*AOCI - Accumulated Other Comprehensive Income
8
Opta Minerals Inc.
Interim Condensed Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2015 and 2014 (Unaudited)
Expressed in Thousands of US Dollars (except per share amounts and number of shares)
March 31,
2015
March 31,
2014
Cash Provided by (Used in) - Operating Activities
Loss for the period $ (757) $ (254)
Items not affecting cash:
Depreciation of property, plant and equipment 773 921
Amortization of intangible assets 505 558
Share-based payment expense 49 109
Gain on disposal of property, plant and equipment (6) (6) Fair value adjustments to contingent consideration (2) 12
Deferred income taxes (649) (80)
(87) 1,260
Changes in non-cash working capital
Trade receivables, other receivables and prepayments 1,718 (4,027) Inventories (591) 3,573
Trade and other payables (1,642) (147) Provisions (18) 13
Income taxes receivable (payable) 87 52
(533) 724
Financing Activities
Proceeds from issuance of common shares - net of issuance costs 6 6
Proceeds from borrowings - net of deferred finance charges 1,947 - Repayment of borrowings - net of deferred finance charges (1,081) (1,942) Repayment of finance lease liabilities (114) (76)
758 (2,012)
Investing Activities
Additions to property, plant and equipment (130) (232) Proceeds on disposal of property, plant and equipment 47 12
Additional consideration paid on acquisitions (139) - Additions to intangible assets - (4)
(222) (224)
Effect of Foreign Exchange Loss on Cash and Cash Equivalents (90) (7)
Net Decrease in Cash and Cash Equivalents (87) (1,519)
Cash and Cash Equivalents
Beginning of Period 2,170 4,084
End of Period $ 2,083 $ 2,565
Additional Cash Flows Information:
Interest paid $ 761 $ 887
Income taxes paid 117 129
9
Opta Minerals Inc.
Interim Segmented Information
For the Three Months Ended March 31, 2015 and 2014 (Unaudited)
Expressed in Thousands of US Dollars
Three Months Ended March 31, 2015
Steel and Industrial
Magnesium Minerals Corporate Total
External revenue by market
Canada $ 3,276 $ 2,194 $ - $ 5,470
US 12,172 4,792 - 16,964
Europe 2,554 2,233 - 4,787
Other 52 2,184 - 2,236
Total revenue from external customers 18,054 11,403 - 29,457
Segment income (loss) before corporate expenses, fair value adjustments to contingent consideration,
finance expense and income taxes 1,708 (1,799) - (91)
Fair value adjustments to contingent consideration 2 - - 2
Corporate expenses - - (234) (234)
Segment income (loss) before finance expense
and income taxes 1,710 (1,799) (234) (323) Finance expense - - - (863) Income tax recovery - - - 263
Loss for the period - - - (923)
Total assets as at March 31, 2015 62,813 44,067 3,506 110,386
Depreciation of property, plant and
equipment 471 269 33 773
Amortization of intangible assets 484 - 21 505
Goodwill and intangible assets
as at March 31, 2015 33,660 - 81 33,741
Expenditures on property, plant and equipment
10
Opta Minerals Inc.
Interim Segmented Information
For the Three Months Ended March 31, 2015 and 2014 (Unaudited)
Expressed in Thousands of US Dollars
Three Months Ended March 31, 2014
Steel and Industrial
Magnesium Minerals Corporate Total
External revenue by market
Canada $ 3,705 $ 2,193 $ - $ 5,898
US 12,327 7,605 - 19,932
Europe 3,391 3,311 - 6,702
Other - 1,957 - 1,957
Total revenue from external customers 19,423 15,066 - 34,489
Segment income (loss) before corporate expenses, fair value adjustments to contingent consideration,
finance expense and income taxes 2,502 (525) - 1,977
Fair value adjustments to contingent consideration (12) - - (12) Corporate expenses - - (1,186) (1,186)
Segment income (loss) before finance expense
and income taxes 2,490 (525) (1,186) 779
Finance expense - - - (901) Income tax expense - - - (132) Loss for the period - - - (254)
Total assets as at March 31, 2014 66,055 54,221 5.783 126,059
Depreciation of property, plant and
equipment 425 455 41 921
Amortization of intangible assets 538 - 20 558 Goodwill and intangible assets
as at March 31, 2014 39,927 650 99 40,676
Expenditures on property, plant
and equipment $ 165 $ 66 $ 1 $ 232
11